Operations Management A CEO Checklist for High-Value Health Care: Ten Elements Foundational elements • Governance priority—visible and determined leadership by CEO and board. • Culture of continuous improvement—commitment to ongoing, real-time learning. Infrastructure fundamentals • IT best practices—automated, reliable information to and from the point of care. • Evidence protocols—effective, efficient, and consistent care. • Resource utilization—optimized use of personnel, physical space, and other resources. Care delivery priorities • Integrated care—right care, right setting, right providers, right teamwork. • Shared decision-making—patient-clinician collaboration on care plans. • Targeted services—tailored community and clinic interventions for resource-intensive patients. Reliability and feedback • Embedded safeguards—supports and prompts to reduce injury and infection. • Internal transparency—visible progress in performance, outcomes, and costs. What is Operations Management? • The design, operation, and improvement of the processes that create and deliver the organization’s services. • The goal is to more effectively and efficiently produce and deliver the organization’s services. Healthcare Management • The management of processes or health systems that provide care to patients. • The use of decision tools to manage and improve processes. • Functional roles: – CEO – COO – CXO – Mid-level manager – Department or function manager Health Care Operations Management – Process improvement. – Quality control and outcomes . – Patient satisfaction. – Financial operations – cost, reimbursement. – Supply chain management – procurement, medical supplies. – Human resources management – productivity, motivating employees. – Information systems management. – Population health. – Physician alignment. – Governance. – Strategy and operations. System Decisions System Design Capacity. Location. Proximity. Service planning. Acquisition and placement of equipment. System Operations Personnel.  Inventory. Scheduling. Product management. Quality measurement and assurance. There are two groups of decisions: Applicability to Health Care • Patient is a participant in the process. • Production and consumption occur simultaneously. • Uncontrollable capacity. • Site selection is dictated by patient location. • Labor intensive. INTRODUCTION TO PROCESS IMROVEMENT Process or Performance Improvement • Scientific management – Mass production • TQM, CQI, Six Sigma • ISO 9000 • Lean • Six Sigma Background • Scientific Management Techniques (1910s) – Frederic W. Taylor • Standardization – Frank & Gillian Gilberth • Psychological Effects of Work Conditions – Henry Gannt • Quantitative Inventory Management (1915) – F.W. Harris • Quality Control & Sampling (1930s) – W. Shewhart • Operations ...

1. Operations Management
A CEO Checklist for High-Value Health Care:
Ten Elements
Foundational elements
• Governance priority—visible and determined
leadership by CEO and board.
• Culture of continuous improvement—commitment
to ongoing, real-time learning.
Infrastructure fundamentals
• IT best practices—automated, reliable information to
and from the point of care.
• Evidence protocols—effective, efficient, and
consistent care.
• Resource utilization—optimized use of personnel,
physical space, and other resources.
Care delivery priorities
• Integrated care—right care, right setting, right
providers, right teamwork.
• Shared decision-making—patient-clinician
collaboration on care plans.
• Targeted services—tailored community and clinic
interventions for resource-intensive patients.

2. Reliability and feedback
• Embedded safeguards—supports and prompts to
reduce injury and infection.
• Internal transparency—visible progress in
performance, outcomes, and costs.
What is Operations Management?
• The design, operation, and improvement of
the processes that create and deliver the
organization’s services.
• The goal is to more effectively and efficiently
produce and deliver the organization’s
services.
Healthcare Management
• The management of processes or health systems
that provide care to patients.
• The use of decision tools to manage and
improve processes.
• Functional roles:
– CEO
– COO
– CXO
– Mid-level manager

3. – Department or function manager
Health Care Operations Management
– Process improvement.
– Quality control and outcomes .
– Patient satisfaction.
– Financial operations – cost, reimbursement.
– Supply chain management – procurement, medical supplies.
– Human resources management – productivity, motivating
employees.
– Information systems management.
– Population health.
– Physician alignment.
– Governance.
– Strategy and operations.
System Decisions
System Design
n.
equipment.
System Operations

4. and assurance.
There are two groups of decisions:
Applicability to Health Care
• Patient is a participant in the process.
• Production and consumption occur
simultaneously.
• Uncontrollable capacity.
• Site selection is dictated by patient location.
• Labor intensive.
INTRODUCTION TO PROCESS IMROVEMENT
Process or Performance Improvement
• Scientific management
– Mass production
• TQM, CQI, Six Sigma

5. • ISO 9000
• Lean
• Six Sigma
Background
• Scientific Management Techniques (1910s) – Frederic W.
Taylor
• Standardization – Frank & Gillian Gilberth
• Psychological Effects of Work Conditions – Henry Gannt
• Quantitative Inventory Management (1915) – F.W. Harris
• Quality Control & Sampling (1930s) – W. Shewhart
• Operations Research/Management Science (1950s)
Linear Programming (G. Dantzig), Queuing Models
• Japanese manufacturing advances – E. Demming (1950s)
• Management Information Systems (1970s)
• TQM (1980s)
• Supply Chain Management, Reengineering (1990s)
Health Care Data
• System limitations of data
• Data input lacks integrity

6. • Data output, multiple interpretations
• Data
– Operational, wait times, LOS
– Clinical, utilization
– Financial
– Productivity
– Systems and process
– Quality outcomes
– Patient satisfaction
TOOLS
The PDSA Cycle
• Plan the change: Establish the objectives
and processes necessary to deliver
results. Set an expected output focus.
• Do implement the change on a small
scale: Choose a small group of people to
test the change.
• Study the results: Measure the new
processes and compare the results
against the expected results.
• Act on what was learned: Analyze the
differences to determine their cause.
Determine where to apply changes that
will include improvement.

7. PDSA is a way to test out improvements on a small scale before
implementing
them across the board. It will give you the opportunity to see if
the proposed
change will work. Here’s how:
Key Questions
• Continuous process
improvement.
• Sustain and improve
gains.
• Cyclical, rapid.
• Customers or patients at
the core of the
improvement result.
Failure Modes and Effects Analysis (FMEA)
• Failure Modes and Effects Analysis (FMEA) is a systematic,
proactive method for evaluating a process to identify where
and how it might fail and to assess the relative impact of
different failures, in order to identify the parts of the process
that are most in need of change. FMEA includes review of the
following:
• Steps in the process:

8. – Failure modes. (What could go wrong?)
– Failure causes. (Why would the failure happen?)
– Failure effects. (What would be the consequences of each
failure?)
Failure Mode and Effects Analysis (FMEA)
• Failure mode: What could go wrong?
• Failure causes: Why would the failure happen?
• Failure effects: What would be the consequences of failure?
• Likelihood of occurrence: 1–10, 10 = very likely to occur
• Likelihood of detection: 1–10, 10 = very unlikely to detect
• Severity: 1–10, 10 = most severe effect
• Risk priority number (RPN): Likelihood of occurrence ×
Likelihood of detection × Severity
The Health Failure Modes and Effects Analysis
(HFMEA)
• Tool for risk assessment.
• Five steps:
1. Define the topic.
2. Assemble the team.
3. Develop a process map for the topic, and consecutively
number each step and substep of that process.
4. Conduct a hazard analysis (i.e., identify cause of failure
modes, score each failure mode using the hazard scoring
matrix, and work through the decision tree analysis).

9. 5. Develop actions and desired outcomes.
Root Cause Analysis (RCA)
• A formalized investigation and problem-solving
approach focused on identifying and understanding
the underlying causes of an event as well as potential
events that were intercepted.
• System at the “root” of the problem, not individual.
• Retrospective outline of events.
– What happened?
– Why did it happen?
– What can be done to prevent it from happening again?
Fishbone Diagram
• Cause and effect.
• Problem = Effect
• Categories of causes of problem:
– Methods
– Machines (equipment)
– People (manpower)
– Materials
– Measurement

10. – Environment
Use a Fishbone Diagram when identifying possible causes for a
problem, especially when a team’s thinking tends to fall into
ruts.
Sentinel Events and/or “Never Events”
• Serious and costly errors that should never
happen.
• Examples:
– Surgery on the wrong part of the body.
– Retention of foreign body.
– Death with a fall.
– Assault.
Force Field Analysis
• A technique for evaluating all the forces for
(driving) and against (restraining) a proposed
change.
• Used to decide whether a proposed change can be
implemented successfully.
• Used to develop strategies that will enable
successful implementation of a change.

11. Force Field Analysis
Plan:
Change to
bedside
shift
handover
Critical incidents on
the increase
Staff knowledgeable in
change management
Increase in discharge against
medical advice
Complaints from patients and
doctors increasing
Care given predominantly
biomedical in orientation
Ritualism and
tradition
Fear that this may lead to
more work
Fear of increased

12. accountability
Problems associated with
late arrivals
Possible disclosure of
confidential information
Total: 19
4
4
3
5
5
Total: 21
Driving Forces Restraining Forces
Feedback Back Loop
Inputs
Land
Labor
Capital
Transformation/
Conversion

13. Process
Outputs
Control
Feedback
Feedback Feedback
Value added
Inputs:
Land
Labor
Capital
Transformation/
Conversion
Outputs
Services
Control
Feedback
Value added
The essence of health care operations is to add value.
Sick
patient Treated
patient

14. • No system is ever completely stable.
• Each system’s performance is modified and controlled
by feedback.
• Feedback is “any reciprocal flow of influence.”
• Feedback can be reinforcing or balancing.
• A confounding problem of feedback is delay.
• Feedback in health care comes in many forms:
– Patient condition
– Patient satisfaction
– Quality/clinical outcomes
System: a set of interacting or interdependent
entities forming an integrated whole
Process Improvement Touch Points
Inputs Processing Outputs
Doctors, nurses Examination Healthy patients
Hospital Surgery
Medical supplies Monitoring
Equipment Medication
Laboratories Therapy
Operations ManagementA CEO Checklist for High-Value Health
Care: �Ten ElementsWhat is Operations
Management?Healthcare ManagementHealth Care Operations
ManagementSystem DecisionsApplicability to Health
CareINTRODUCTION TO PROCESS IMROVEMENT Process
or Performance ImprovementBackgroundSlide Number 11Health

15. Care DataTOOLSThe PDSA Cycle Key QuestionsFailure Modes
and Effects Analysis (FMEA)Failure Mode and Effects Analysis
(FMEA)The Health Failure Modes and Effects Analysis
(HFMEA)Slide Number 19Root Cause Analysis (RCA)Fishbone
Diagram Slide Number 22Sentinel Events and/or “Never
Events”Force Field AnalysisForce Field AnalysisSlide Number
26Slide Number 27Slide Number 28